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The Spread of Modern Industry to the Periphery since 1871$
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Kevin Hjortshøj O'Rourke and Jeffrey Gale Williamson

Print publication date: 2017

Print ISBN-13: 9780198753643

Published to Oxford Scholarship Online: March 2017

DOI: 10.1093/acprof:oso/9780198753643.001.0001

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Industrialization and Growth in Peru and Mexico, 1870–2010

Industrialization and Growth in Peru and Mexico, 1870–2010

A Long-Term Assessment

Chapter:
(p.289) 12 Industrialization and Growth in Peru and Mexico, 1870–2010
Source:
The Spread of Modern Industry to the Periphery since 1871
Author(s):

Aurora Gómez-Galvarriato

Graciela Márquez Colín

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780198753643.003.0012

The industrialization experiences of Mexico and Peru differed because of their different market sizes and location. Mexico’s larger market and border with the US gave it greater opportunities for industrialization. Peru’s development is closer to that of the classic late-nineteenth-century commodity exporter and followed the primary-goods-exports model for longer. Until the 1980s both countries had relatively high wages, inhibiting the development of labour-intensive manufactured exports, but they lacked the education and skill levels to produce more technologically sophisticated manufacturing goods. Contrary to common belief, commodity export-led growth supported industrial growth as long as exports were diversified and the government pursued sound fiscal and monetary policies. Import substitution policies fostered manufacturing growth when coupled with macroeconomic stability and policies promoting domestic and foreign investment. After economic liberalization in recent decades, Peru returned to relying on commodity exports, while Mexico developed assembly export manufacturing, with very low levels of domestic value added.

Keywords:   Mexico, Peru, manufacturing, import substitution, primary commodity, export-led growth, factor endowment, education, macroeconomic policy

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